The Merkel-Sarkozy Summit: Fiddling While Europe Burns

German Chancellor Angela Merkel and French President Nicolas Sarkozy discuss the European debt crisis at Elysee Palace on August 16, 2011 in Paris, France. (Photo: Trago / Getty Images)

Politicians are notorious cynics, but French President Nicolas Sarkozy may be in a league of his own when it comes to exploiting collective crises in the hopes of creating personal gain. That is precisely what he was up to Tuesday during his joint press conference with German Chancellor Angela Merkel, where he sought extend a manipulative and hollow political ploy already attempted at home to the entire euro zone. In doing so, Sarkozy’s theatrics sought to suggest he’s both in control of the increasingly dramatic debt situation, and project the kind of leadership he’ll be asking French voters to renew next spring. As such, his performance was one part shell game, one part blame-game misdirection, and lots of false hustle.

As their advisers had warned going into their meeting, the two leaders did not propose anything sufficiently sweeping or dramatic to calm market fears over the debt crisis that has been roiling the euro zone for months. Instead, the pair said they’d table a series of initiatives they’ll ask other common currency members to sign off on during coming summits. Virtually all those initiatives either represented useless doubling of rules already in place that national governments flaunted while building up excessive and prohibited debt; or called for “a veritable government for the euro zone” requiring the kind of surrender of national decision-making on economic and financial matters that Sarkozy and Merkel themselves have long rejected as an infringement on their sovereignty. The result was both leaders not so much fiddling as Rome burned, but rather blowing smoke as the euro continued to be engulfed in the flames of debt crisis.

The most patently hypocritical of Tuesday’s proposals was the creation of a euro zone government—an entity that would manage and safeguard the currency, while also presumably riding roughshod over member economies to ensure responsible national policies. Germany in particularly has been wary of creating a powerful collective euro oversight body that Berlin fears (ironically) might be overly influenced by economically undisciplined capitals like Paris. But whenever talk of creating such a structure has gotten serious, France has echoed German doubts over the idea of surrendering national authority required to make such a European body have any real impact. And such aversion to loss of any national control was sounded anew by Sarkozy and Merkel even as they posited the idea of a supranational economic government. They ruled out much-mooted ideas of creating euro bonds.

Sarkozy scowled at calls for euro bonds by saying they’d outrageously penalize the more stable economies of the euro zone by binding them to debt guarantees for over-extended partners. At the same time, Sarkozy claimed the crisis made it evident the future of both the euro zone and the European Union lies in increased integration and federation. Translation: as usual, the big movers of the euro zone are only interested in linking arms when they feel there’s more carrot than stick involved—or when they feel confident they can wriggle out of the embrace when they decide it’s become too confining. No question, then, of responding to the attack on the euro’s weakest members by moving quickly to combine all the strengths of its biggest economies in a far more integrated configuration to help the sicker ones recover–and the wider entity to exit the crisis fully unified.

For Merkel’s part, in urging her partners to adopt Germany’s “debt brake” themselves, she is not only responding to the current crisis with a measure that hasn’t done much good at home; she’s also apparently trying to politically assist Sarkozy’s uphill re-election hopes by lending support to his earlier controversial calls to impose a similar “golden rule” on debt limitation in France. Sarkozy is now seeking to portray resistance from his leftist opponents to that constitutional ceiling on debt as the refusal of out-of-touch, tax-and-spend Socialists to understand (much less find cures for) the gravity of the euro zone debt crisis. In doing so, however, Sarkozy feigns mystification for why his leftist rivals would want to follow the lead of (much less be bound by) the president who has overseen the ballooning of French debt from around 66% to its current 84.7% level since 2007. Socialist dissenters also note that Sarkozy isn’t the only rightist ill-placed to start taking the moral high ground on debt: since 1988, conservative governments have been responsible for creating three times the amount of French public debt than ruling leftists during the same period. The last Socialist-led cabinet actually reigned over a slight reduction in French debt.

Despite that, Sarkozy used his press conference with Merkel to very clearly nod to the aversion of French leftists to follow his lead on creating domestic laws, and seek to score points among home-crowd viewers by suggesting his political foes sought to imperil the French economy and the euro by rejecting his “golden rule” call. He then contradicted himself by using his own refusal to create euro bonds that many analysts say will be necessary to save the common currency as another reflection of his political and economic purity vis-à-vis opponents. Calls from the left to create euro bonds as a measure of solidarity across the euro zone, Sarkozy mocked “reminds me of those who were in a rush to create a single currency without first having an economic government” like the kind he and Merkel are proposing. Of course, that government wasn’t previously deemed necessary before to watch over the legally binding all euro zone nations officially promised to respect when joining the euro—and have flaunted since. The crisis changed all that, Sarkozy and Merkel suggests—just not enough for either to remain coherent in their positions.

Given the political gesticulation and manipulative electoral motives driving many of those comments, it’s perhaps not surprising that observers with little interest in the inside baseball of German and French politics were singularly unimpressed by the measures the two leaders unveiled. Wall Street slumped by 1.3% as Merkel and Sarkozy pressed on with their suggested euro crisis remedies, rehashing rules people have ignored—and new economic governance that presumably would not have the kind of power both have long resisted giving into. Doubtless, the Frankfurt and Paris stock markets would have similarly tanked following the synchronized pantomime at the Elysée Tuesday, however trading at both had been halted earlier awaiting the duo’s presser. Given today’s response to the crisis, shuttering global bourses may be the only way to prevent traders from airing their skepticism over the proposals of cynical officials.